Are You (Financially) Literate?

Perhaps you just completed your taxes and you are yearning to take a breather from your financial affairs for a while. Not so fast... April is Financial Literacy Month so the end of tax season shouldn't mean the end of putting your financial house in order — or keeping it on track. Here are five easy steps you can take to ensure that you are in better financial shape by the end of the year.

1. Do you know where your money is? No, this isn't a trick question. Some people have multiple accounts spread around with various financial institutions.  Most of the time, this is not by design, but by default and a reluctance to change. Perhaps it's time to consolidate your accounts to reduce fees; perhaps you need to revisit how your assets are allocated; but whatever you might need to do, you need to know two things-where your money is housed (yes all of it) and why you should or shouldn't make a change.
2. Do you know what your burn rate is? We've discussed this issue before, but this is an exceptionally important part of managing your wealth. After you know where your assets are-or perhaps even before-you need to know how much you are spending each month. If you want to find a quick ten to twenty percent to add to your bottom line, keep track of every expenditure for sixty days. You'll be amazed at where your money goes-it really is an eye-opening experience- and how you might be able to increase your savings.
3. What do you need? No, what do you really need?  "Stop wanting stuff. It keeps you from seeing what's real. When you want stuff, all you see are things." This philosophical quote by Lao Tzu may be one of the more important quotes in our society. It's difficult-maybe almost impossible-to stop wanting stuff, but what if everyone actually stopped to ask the question "what is most important to me?" When we gain clarity around the top five things that are important to us, my guess is that the new and improved "thingie" really isn't all that important after all. If we don't just blindly accumulate things there's an added benefit to the reduced clutter which is reduced responsibility and then ultimately we have more opportunities to live and get on with our lives.
4. Hire a financial advisor or an estate planner. Maybe your assets have grown and you need some guidance. If you don't work as a professional in the field, it is difficult to stay on top of all of the changes in the marketplace. If and when you decide to hire a professional, make sure that you embrace their philosophical approach and that you have done extensive research on those with whom you will entrust your assets. 
5. Become debt free! If you don't owe anything-or at least much of anything-you can live a much more creative and fulfilling life. You can live the life of your dreams!